Auditor raps Pullicino for €1.2m direct order spend
Matthew Vella
The Ministry for Resources and Rural Affairs is claiming it has respected procurement laws in spite of a scathing report by the Auditor General, which says George Pullicino’s ministry issued over €1.2 million in direct orders and consultancies that were not covered by agreements and that “procurement rules were not adhered to in the award of the contract.”
In his report tabled in parliament this week, the Auditor listed a dozen instances where the ministry issued direct orders without finance ministry approval. And it paid €60,000 in services that were not covered by VAT receipts, going against government rules not to conduct business with tax defaulters.
In similar fashion to the direct orders issued at Mater Dei for its security officers, Pullicino’s ministry also extended service contracts beyond their date of expiry, without signing any formal agreements.
The Auditor has told the ministry that “rigid compliance” with the law was required “for the sake of fairness and transparency.”
Shortcomings at the Marsa abattoir were the most conspicuous. A €477,000 direct order for consultancy on the incinerator “could not be traced”. €32,000 paid to architects engaged directly for refurbishment carried no “written evidence of approval” from the finance ministry, and no agreement was signed with the architects. The abattoir upgrade contract was also extended for two years for an additional €165,000 without a formal extension, despite the project had to be carried out “as soon as possible and within 2006”. Another €65,000 was paid for skips at the abattoir in 2007 and 2008, despite the expiry of the contract in 2006 – the Auditor said “no formal extensions were traced”. The Auditor also said that no agreement could be traced between waste management agency WasteServ and the government, for €244,000 in expenses reimbursed by the ministry. “It could not be ascertained that WasteServ were entitled to a full reimbursement of all expenses and that the payments effected were justifiable and accurate.” From testing on three payments of €2.1 million made to WasteServ in 2008, €244,000 “was not supported by invoices”.
Another €60,000 paid to service providers in 2008 “were not supported by fiscal receipts or tax invoices”, the Auditor said.
Indeed, the ministry was supposed to report the tax defaulters to the VAT division for not complying with fiscal obligations as required by the finance ministry’s orders. “Business with persistent defaulters is to discontinue,” the Auditor said.
€100,000 paid for the provision of skips at the Pitkali markets could not be verified: a call for tenders was not issued, information on the suppliers’ names was not made available to the Auditor, and no agreement or bank guarantee were traced. The Pitkali cleaning contract of €58,000 was not covered by a call for tenders, but chosen as the cheapest out of a total five quotations received.
An unnamed company was paid €60,000 to provide “various consultancy services” but neither the agreement nor documentation on its engagement was made available.
No tender documents were available for €45,000 paid for the daily hire of a forklifter and dumper; no agreements could be traced for the €18,000 paid to consultants on the Ta’ Qali animal welfare shelter, €14,000 for consultants on the Xrobb l-Ghagin nature park; and €10,000 for the consultant for the Salini rehabilitation.
The Auditor also said a €9,300 contribution to a private NGO should not have been paid “unless backed up by a valid agreement”.
Ministry ignored rules Although a spokesperson for Pullicino said it was common practice that consultants are engaged on an ad hoc basis, the Auditor General was clear that it should have sought approval from the finance ministry before engaging the architects and consultants of its own choice without issuing a public call for tender.
The spokesperson however said “the ministry always ensures value for the taxpayers’ money in the effective, and good quality services delivered by these professionals.”
But the auditor said finance ministry approval also had to be sought for extending contracts beyond the agreed period, and that services had to be backed by agreements.
When asked whether his ministry never intended to follow procurement laws in the first place, Pullicino’s spokesperson said no agreements were required for the direct orders - contrary to the Auditor’s statements - and that the direct orders had been authorised.
“How can the ministry not follow procurement laws if, in the first place, the direct order/contract extension has been authorised… it is evident that there was always the intention to follow the spirit of procurement laws.”
When it was put to the spokesperson that the shortcomings in following the laws had opened up George Pullicino to a wrongful impression on the way contracts are issued by his ministry, the spokesperson said the minister “does not personally supervise awards of direct orders, extensions of contracts…”
“Notwithstanding, there are instances where he issues certain authorisations in terms of the procurement regulations. This he makes after proper recommendations by ministry officials. The minister has always taken immediate action where any infringement is drawn to his attention. Furthermore, with the implementation of the NAO recommendations, the ministry’s performance will surely reach much higher standards of quality in its deliverables.”
mvella@mediatoday.com.mt
Procurement explained
When a government ministry wants to appoint a service provider directly, this can only be done with the right justification and if the contract does not exceed a certain amount of money.
Approval must be obtained from the finance ministry, with such approval indicating reasons justifying this approach. Each service must be backed by a signed agreement, contrary to the claims by the Resources Ministry.
Extending an expired contracts must also be approved beforehand by the finance ministry, and backed by a bank guarantee.
Calls for quotations are made for particular services usually under €45,000 – which is why services costing more than that must be awarded following a public competition or call for tenders, to ensure maximum transparency.
Thanks to the Auditor’s investigations, action at the Resources Ministry resulted in the termination of irregular contracts, new policies and controls, and the regularisation of several consultants.
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